5.10 Suppose the individual's utility function for three goods, Xu X2, and Xs, is separable; that is,
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5.10 Suppose the individual's utility function for three goods, Xu X2, and Xs, is "separable"; that is, assume that U(XU X« X3) = Ul(X1) + £/2(X2) + l/s(Xs)
andU'i>0 U'-<0 for i = 1, 2, or 3.
Show that
a. None of the goods can be inferior;
b. dXi/dPi must be < 0.
In the Chapter 6 extensions we examine this separable utility case in more detail.
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Related Book For
Microeconomic Theory Basic Principles And Extensions
ISBN: 9780030335938
8th Edition
Authors: Walter Nicholson
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